The Impact of Coaching Leadership Training on Employee Engagement and Psychological Capital

Theoretical background

What is coaching leadership?

In the contemporary landscape of work organizations, the integration of coaching into leadership practices is transforming traditional management dynamics. This evolution is not merely about adding a supportive function but about fundamentally enhancing organizational resilience and effectiveness.

As organizations face increasingly complex environments, the demand for adaptable and proactive leadership is more pronounced than ever.

Leading with coaching is a collaborative relationship between manager and employee, where we focus on achieving work goals and desired changes (Spence and Grant, 2007). Coaching, in this context, is understood as a set of methods and techniques used by the leader to proactively solve problems and develop the potential of employees (Grant and Hartley, 2014). Leaders who adopt coaching practices not only inspire better performance (Gallup, 2013) but also foster an environment where employees feel valued and supported in their personal and professional growth (Jones, Woods, & Guillaume, 2016).

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What are the benefits of coaching leadership?

Coaching leadership extends beyond conventional management to foster a culture where leader competencies, employee engagement, and psychological capital are significantly enhanced. Psychological capital, which includes resilience, optimism, hope, and self-efficacy, plays a crucial role in employees' ability to navigate workplace complexities (Luthans, Youssef-Morgan, & Avolio, 2015). Moreover, coaching positively affects team dynamics, enhancing communication, goal clarity, and conflict resolution, which in turn boosts team performance and adaptability (Clutterbuck & Megginson, 2005). This holistic improvement in team functioning is essential for maintaining high performance in fast-paced business environments.

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Empirical evidence strongly supports the effectiveness of coaching like leadership behaviour:

22% improvement of employee productivity (Jones, Woods, & Guillaume, 2016);

25% improvement of team learning behaviours (Edmondson 1999, 2019);

28 % improvement of employee satisfaction (Jones, Woods, & Guillaume, 2016);

32% reduction in employee turnover (Grant, 2013; Stober & Grant, 2006)

40% increase in creativity and innovation (Grant, 2013; Stober & Grant, 2006);

70% enhancement in work performance for leaders who adopted coaching leadership (Theeboom, Beersma, & van Vianen, 2014).

Furthermore, Sewon Kim’s (2014) research indicate that coaching helps employees understand their job roles better, which in turn increases their job satisfaction and performance. This underlines the strategic value of coaching as a method of conveying clear job expectations and providing the necessary support to meet those expectations, thus directly contributing to improved job outcomes (Kim, 2014). The increasing application of positive psychology principles within workplace settings underscores a shift towards proactive well-being management, where leaders play a pivotal role in fostering an environment conducive to psychological growth and resilience (Seligman & Csikszentmihalyi, 2000).

The financial implications of coaching are also significant, with reports of an average return on investment (ROI) of almost six times the cost of coaching programs (McGovern et al., 2001).

These statistics highlight the tangible benefits of integrating coaching into leadership, directly impacting organizational productivity and financial performance. However, despite these promising outcomes, the research on long-term effects of coaching within leadership practices on organizational outcomes remains in its infancy.

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What else do we already know about coaching leadership?

Van Zyl et al. (2020) contribute a detailed exploration of positive psychological coaching. This approach not only focuses on achieving specific outcomes but also on fostering an organizational culture that emphasizes continuous development and well-being. The study delineates a model of positive psychological coaching that involves multiple components including strengths profiling, goal setting, and ongoing support, reinforcing the coaching leadership’s role in promoting an environment of growth and resilience (van Zyl et al., 2020).

A recent controlled trial by Peláez Zuberbuhler et al. (2020) provides compelling evidence of the effectiveness of structured coaching interventions. In this study, executives and middle managers underwent a coaching-based leadership program, which included group workshops and individual coaching sessions over three months. The intervention, which utilized a strengths-based approach and the RE-GROW model, led to significant increases in participants' coaching skills, PsyCap, work engagement, and both in-role and extra-role performance. This rigorous study not only supports the efficacy of coaching-based leadership in enhancing organizational metrics but also underscores the importance of structured training programs in developing these competencies.

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What’s next?

We believe coaching leadership is the next big thing in leadership development.

A coaching-oriented leadership style is associated with higher levels of trust and interpersonal connectivity, which significantly contribute to organizational cohesion and stability (Schein, 2010; Edmondson, 2019).

In our own research we asked ourselves what benefits in employee engagement and psychological capital can we find after applicating a leadership training programe? We developed a training programe and a preliminary sequence study to better understand the effects of transformation into coaching leadership. This is just our first step before we conclude a longitudinal study of effects. We would like to share our results and help develop an even better coaching leadership training.

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Method

Objective:

We developed a one year long training. Our goal was to empower both leaders and their employees through training leaders in coaching skills. Leaders were expected to advance in specific coaching competencies, while employees were to improve in psychological capital and work engagement.

Training program details:

We organized a multi-month training program for leaders. Throughout the entire educational program, led by a team of trainers and coaches from Uporabna psihologija in coaching d.o.o, we based our approach on the eight competent behaviors developed from Zuberbuhler, Salanova, and Martínez (2020) research:

• (1) Building a Close Working Alliance: The leader creates conditions for building trust and understanding shared interests in achieving work goals and fulfilling the mission. This approach is grounded in Carol Dweck's "growth mindset" and Amy Edmondson's concept of "psychological safety."
• Effective Open Communication: This includes (2) influential leadership with questions, where the leader as a coach is in the role of a communicator, and (3) active and empathetic listening, where the leader as a coach is on the receiving end. We trained various types of questioning and explored their strategic role. Active and empathetic listening was expanded with awareness of psychological needs and understanding of working in emotionally charged situations. These techniques were practiced both in isolation and situationally through role-playing and case studies from real work environments.
• Supporting Learning and Development: The leader as a coach focuses on (4) encouraging the development of potentials and (5) providing quality development guidance with continuous feedback. We explored areas of development and interventions that a leader as a coach can use to build positive relationships, acquire knowledge, create skills, and enhance stamina for achieving goals. We emphasized a positive approach to giving and seeking feedback at every step and trained in providing quality feedback.
• Highlighting Strengths and Opportunities: The leader is consistently attentive to (6) highlighting the strengths and opportunities of employees. This represents a constant developmental orientation in the leader's role, which was repeatedly emphasized in every feedback exchange.
• Goal-Oriented Coaching: The leader as a coach still operates goal-oriented, which requires (7) quality goal setting and (8) monitoring goal achievement. We developed and evaluated goals based on the S.M.A.R.T. method and continuously encouraged leaders to diligently follow through on agreements.

Training program structure:

1. Six training workshops conducted by an external provider.
2. Theoretical knowledge tests and practical skill assessments by external evaluators.
3. Six hours of individual coaching sessions with an external coach.
4. Six monthly supervision sessions with an external coach and supervisor.
5. Three rounds of competency assessments among leaders and measurements of psychological capital and work engagement among employees.

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Participants and implementation:

We found an organisation which wanted to change their leadership style towards coaching leadership. The organisation is a regional insurance group, but we focused our work only on the parent company with about 250 employees. There were 18 leaders who participated in 2 groups of training program, 8 leaders who were not yet included and employees from all three groups of leadersh who participated our research. Each group's program was completed within one year. We formed three groups of leaders and their employees for observation:

• Group 1 (N=7): Completed the coaching leadership training.
• Group 2 (N=11): Near completion of the training workshops.
• Group 3 (N=8): Yet to start the training.

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Evaluation:

To determine the impact of coaching leadership on employees, we collected self-reported data from employees regarding their psychological capital (Psy-Cap 16 item questionnaire) and work engagement (UWES – 9 item questionnaire). Results from our preliminary study follow.

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Results:

Our hypothesis that coaching leadership positively develops psychological capital and positively impacts employee engagement has been confirmed, but with some but with reservation.

Positive personal resource change

The results of our study indicate that employees led by leaders with at least basic coaching knowledge and skills possess more positive resources, as evidenced by higher scores on all scales of psychological capital compared to employees led by leaders without coaching leadership training.

This suggests that these employees perform their tasks with greater ease and are better prepared to handle changing and demanding circumstances. Similar to the findings of Zuberbuhler, Salanova, and Martínez (2020), we confirmed that coaching leadership contributes to greater resilience and optimism in the workplace over the long term. We believe that employees who are empowered to independently solve problems, and have leaders who support them without taking over tasks or making decisions for them, operate more autonomously and align better with a growth mindset. Additionally, it is essential for leaders to provide sufficient time and experiences to build optimism and resilience.

Moreover, coaching leadership has a significant immediate impact on employees' experiences of hope and personal effectiveness.

Employees in Group 2, led by leaders undergoing coaching skills training, perceive the change as positive and feel more empowered even during the implementation of new approaches. This outcome is likely connected to the development of mutual trust and equality between employees and leaders, fostering autonomy and performance. However, the effect appears not to be long-lasting, as employees in Group 1 report only slightly higher scores than those in Group 3. We conclude that while coaching leadership creates a positive first impression, leaders must persist in this new leadership style, incorporating strengths profiling, goal setting, and ongoing support to promote an environment of growth and resilience (van Zyl et al., 2020).

Improved long-lasting engagement

When examining work engagement, we find that employees led by a leader as a coach are the most engaged at work.

The long-term effects of coaching leadership can be expected to include more effective performance of work duties, increased dedication and pride in one's work, and more frequent immersion and focus on tasks and priorities.

Group 1 scores highest across all three dimensions of the UWES scale (vigor, dedication, and absorption). There is also a situational effect, as Group 2 scores second on the scales of dedication and absorption. Coaching leadership empowers employees to make decisions and holds them accountable for their actions, as consistent goal monitoring and problem-solving are expected from leaders as coaches.

However, there is one finding that does not align with our hypothesis. Group 2 scores lower on the Energy dimension than Group 3. This suggests that the immediate impact on performance when working with leaders as coaches is reduced. Employees may need to adjust to new expectations from leaders, who are less likely to give advice or take initiative in bringing solutions and are more likely to facilitate the process of problem-solving and goal attainment. As previously mentioned, we believe that time and experience with positive outcomes are needed to build the long-lasting effects of coaching leadership.

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Conclusion

Our research has confirmed that coaching leadership positively impacts both employee engagement and the development of psychological capital. Employees led by leaders with coaching training demonstrated higher levels of resilience, optimism, hope, and self-efficacy. These findings suggest that such employees perform tasks with greater ease and are better prepared for changing and demanding circumstances. Specifically, Group 1, which completed the coaching leadership training, consistently scored highest across all dimensions of the UWES scale, including vigor, dedication, and absorption. These results underline the practical benefits of coaching leadership, such as improved work performance, increased dedication and pride in one’s work, and a greater focus on tasks and priorities.?

Coaching leadership also empowers employees by fostering an environment of mutual trust and equality. This empowerment enables employees to make decisions independently and be accountable for their actions, thereby enhancing their autonomy and alignment with a growth mindset. This approach also emphasizes consistent goal setting and problem-solving, which are crucial for sustained organizational growth and resilience.

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Scientific Relevance

The scientific relevance of this study lies in its contribution to the growing body of literature on coaching leadership. By empirically validating the positive effects of coaching on psychological capital and work engagement, this research supports the integration of coaching practices into leadership development programs. Our findings align with existing studies, such as those by Zuberbuhler, Salanova, and Martínez (2020), and van Zyl et al. (2020), further reinforcing the long-term benefits of coaching leadership in fostering a supportive and productive workplace environment.

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Limitations and Guidelines

Despite these promising results, our study has several limitations. Firstly, the sample size was relatively small, with only 26 leaders and their respective employees participating in the training program. Secondly, the study was conducted within a single organization, which may limit the generalizability of the findings. Additionally, the short duration of the study might not capture the long-term effects of coaching leadership fully. The immediate positive impact observed in Group 2 suggests that longer periods may be necessary to see sustained benefits in all dimensions of psychological capital and work engagement.

Leaders still learning new leadership approaches may inadvertently cause frustration among employees.

This change in leadership behaviour presents a frustrating circumstance that employees view positively but have not yet learned to cope with effectively. Therefore, we recommend that companies implement coaching skills training not only from the "top-down" but also from the "bottom-up." It is advisable to introduce similar content to employees as presented to leaders, providing them with guidelines for successful collaboration with a coaching leader.

Measuring the effects of such programs adds significant value, though it can be time-consuming and challenging. We recommend thoroughly informing both leaders and employees about the purpose of the training, the intent of the measurements, and the goals pursued. Emphasise the desire for honest feedback and highlight that it is entirely normal (or even desirable) for initial results to be poorer, improving over time as learning progresses. We suggest transparently reporting individual and group results to both employees and leaders after each measurement.

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Future Research Directions

1. Future studies should aim to include larger and more diverse samples across different organisational contexts to enhance the generalisability of the results.
2. Longitudinal research designs would be beneficial to assess the long-term impact of coaching leadership on employee outcomes.
3. Additionally, exploring the specific mechanisms through which coaching leadership influences psychological capital and engagement could provide deeper insights into the processes involved.
4. Investigating the role of organisational culture and other contextual factors in moderating the effects of coaching leadership would also be valuable.
5. Also we can focus on finding new outcome and include different psychological constructs, maybe the link between coaching leadership and the quality of attachment or fulfilment of psychological needs.
6. Adding another layer and searching for outcomes in business performance would bring a multi-layer view of the impact from coaching leadership.

In conclusion, our study highlights the significant positive impact of coaching leadership on employee engagement and psychological capital, underscoring the importance of incorporating coaching practices into leadership development programs. Continued research in this area will further elucidate the mechanisms and long-term benefits of coaching leadership, contributing to more effective and supportive workplace environments.

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References

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